Cohen & Company Inc (COHN) 2010 Q2 法說會逐字稿

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Second Quarter 2010 Cohen & Company Inc. Earnings Conference Call. My name is Wes, and I will be your operator for today. During the presentation all participants will be in a listen-only mode. After the speakers' remarks, you will be invited to participate in a question and answer session.

(Operator Instructions)

As a reminder, this conference is being recorded. Before we begin, the company has asked me to read the following statement. You are cautioned that many statements made during this call are forward-looking statements that are based on assumptions regarding the economy and financial markets that are subject to a number of risks and uncertainties as set forth in the Company's earnings release and its SEC filing. Please read the statement in today's release regarding forward-looking information. I would now like to hand the call over to your host for today's call, Mr. Daniel Cohen, Chairman and CEO. Please proceed.

Thank you, Wes, and thank you, everyone, for joining us for our second quarter results conference call. With me on the call are Chris Ricciardi, the President and Head of our Capital Markets business, and Joe Pooler, our CFO. We will discuss the second quarter results, our ongoing capital markets business and its continued development, and the impact of our recent strategic transactions in global developments on our business. I will give an overview and discuss briefly the recent strategic transaction where we monetized our bank CDO management fees. Chris will then talk about the capital markets business and the impact of financial reforms. And Joe will give some detail on the financial results and some financial color on our recent transaction.

We were happy with the quarter. We were happy with the development of the business. And we were happy with freeing financial resources to pursue our growth in the capital markets, principal investment, and new growth asset management businesses. Our results continue positively. We earned $0.20 per share; we experienced growth in our trading revenues of over 100% year on year; we continued to develop new capital markets businesses; and we completed our second new issue of the year in fixed income.

We announced a new dividend which reflects our confidence in the continued cash resources of our business. Our adjusted net income of $0.40 which represents operating income, computing in accordance with GAAP before depreciation and amortization, impairments of intangible assets and share-based compensation expense, all items that are non-cash reflect the strength of our ongoing overall businesses. And these are our businesses that we are committed to grow.

Our asset management revenue from our CDO management business continued to shrink, but in a difficult environment to raise capital we've had some success. Our Deep Value funds and our European and other separate accounts under management have grown from $161 million at June 30, 2009 to $523 million at June 30, 2010. These generally carry a higher base management fee, and we recognize our profits from our carried interest only after we return 100% of the invested funds, and between 8% and 10% return. Our Strategos Deep Value funds have had approximately a 22% return annualized.

As we announced last Thursday, we signed an agreement to sell our Alesco contract rights, and we entered into a related three-year service agreement for an aggregate total proceeds of up to $44.5 million, including a potential earning out of up to $12 million. We also closed on a new $14.6 million, two-year secure credit facility, which refinanced and extended the maturity of our previous credit facility at a reduced rate. And finally, we made a cash offer to purchase $9.5 million of our subordinated notes at 80% of par.

All of these transactions are significant developments for our company because they free up resources, they free up interest payments that we're making, they free up management time, and they free up the ability that we have to invest in the growing parts of our business. So we were able to essentially monetize over the next three years part of our historic business and really redeploy that in what we think will drive substantially continued growth in the earnings of our company.

Our recent transaction to sell the management of our Alesco bank CDO funds, which represented 40% of our assets under management at June 30th -- and as I had just said, the historical basis for what we were doing -- and 40% of our second quarter asset management revenue, really does allow us to generate these cash resources. And we will be able to pursue other opportunities in asset management, principal trading and capital markets business. If we're able to repurchase our subordinated notes, these will reduce our interest expense by $1.1 million per annum. We'll increase our flexibility to deploy our cash, which stood at $30.9 million at the end of the quarter in our capital markets and principal businesses thanks to the new bank facility we put in place.

Again, just to reiterate, the trust-preferred CDOs for the banks were not a growth opportunity for us, and their monetization allows us to pursue real growth. I'm going to turn it over to Chris now to speak about our capital markets and the growth opportunities, followed by Joe Pooler, our CFO.

Okay, thank you, Daniel. Good morning everyone. Those of you who listened to what I said during last quarter's call will find this quarter's message to be substantially similar. Second quarter was very much like the first quarter for our core capital markets business. And our core capital markets business is generally developing according to our plan.

Before we go into specific issues, let me restate some of our basic philosophy and strategy. We have several core beliefs. One is that the credit market, generally defined, is the area of greatest opportunity to us. The credit market is large and diverse, generally very profitable. And more importantly, we're quite experienced and well known among our clients in the area. In other words, we're very competitive in the space. Across the market, the second quarter was difficult for trading of the more commoditized credit products, principally investment-grade corporate bonds. And our experience was no different from our competitors.

However, our business mix and strategy is substantially different, such that we do not see a significant drop in our overall trading revenue relative to prior quarters. In fact, we're up reasonably from most prior quarters. Only our investment grade corporate bond business experienced reduced revenues this quarter. All other areas reported better results than prior quarters. This shows one view into the benefits of our strategy.

For example, we're not over-reliant on one product area like corporate bond trading, but also trade all types of structured products such as mortgage-backed securities. We have capabilities in agency and non-agency mortgage-backed securities, residential and commercial, CLOs, CBOs, SBAs and brokered deposits. We also maintained our core belief in client coverage diversity. By this we mean we prefer to cover many different types of clients. We find that this enhances our own business opportunities and is more helpful to our clients when executing their transactions.

For example, unlike many of our competitors, we have substantial credit operations in Europe. We also have a business that does high volumes of small ticket fixed income trades with regional dealers. This allows us to effectively cover small investors without covering small investors directly. This dealer business also highlights another strategy we have, to build a stable base of regular and recurring high-volume but low-margin revenue while also seeking higher margin but less predictable opportunities -- one of the reasons that we added equity derivatives brokerage during the quarter and we began to see revenue from both the equity derivatives and the small ticket dealer businesses towards the end of the quarter. Neither are fully ramped up yet to plan.

Our higher-margin activities generally consist of risk trading to facilitate client transactions. This so-called capital light strategy has been working according to plan insofar as we've had a significant percentage of our trading revenue generated by capital light trades as opposed to riskless principal trades. We believe this helps set us apart from many of our competitors, and enhances significantly our importance to our clients. Another higher-margin business activity for us is the new issue and advisory business. There are two highlights from the quarter in this area.

One is a securitization transaction we did for Fortis Bank Nederland. We had an opportunity of raising capital related to their Dutch mortgage portfolio -- objective of raising capital related to their Dutch mortgage portfolio. We're the sole placement agent for the transaction. I believe this highlights nicely part of our European strategy, which is to work with European clients on some of their non-core exposures, and redistribute them cross-border to some of our US clients. The other significant transaction in the quarter was an advisory assignment on fund management fees which are purchased by an affiliate, Fortress -- not Forest, but Fortress -- Investment Group. We advised the Fortress affiliate.

And we continue to look for similar transactions, which are either new issue securitizations, corporate private placements or advisory assignments which, if they are successful, would be beneficial to us and our clients. Finally, let me discuss what I believe are the effects on our business of the Financial Reform Act. This is of course very complicated legislation, and the final implementation is somewhat unclear. But some things seem reasonably likely to enhance our business.

One key element of the Act which could directly impact our business is a requirement that certain derivatives, including credit default swaps -- which are the derivative version of the corporate bonds we trade -- be executed in a central clearinghouse, and that there be trade transparency via execution through a swap execution facility or SEF. As a related requirement, the clearing arms of banks be walled off from their trading arms and free from conflicts. So we believe that one of the results of this new regulation is that derivatives will likely be directly accessible to us as a trading product where historically they were not.

You may have heard that these derivatives are among the most profitable trading products for large banks. Our ability to access these products makes us far more relevant to certain of our clients such as hedge funds and gives us a window into substantial potential profitability. Still, there's more work to do, and we expect some resistance as we try to implement this strategy. We expect to work on this over the course of the next year as the law takes effect. Now I'll turn it over to Joe Pooler for a further detailed discussion of our financial results.

Thank you, Chris. We'll start with some brief remarks on the P&L, and then we'll talk a little bit about the quarter ending balance sheet, and then follow up with some color on the strategic transactions we announced last week.

In our statement of operations for the quarter, we experienced significant improvement in all profitability measures compared to the prior year period. Our stronger capital position continues to allow us to capitalize on opportunities in trading and principal investing. Our net revenue increased over $15 million from the prior year period to $35.8 million, and our operating income increased $6.5 million to a positive $4.7 million.

We reported fully diluted earnings per share of $0.20, and we are pleased to initiate a quarterly dividend of $0.05 per share. Our net trading revenue increased 103% from the prior year period, primarily as a result of our increase in overall capital markets headcount to 101 employees as of June 30, 2010, compared to 47 at the prior year period, and improved results as we continue to transition to a strategy of using some risk capital. We continued expanding our capital market segment including additions in our European operation and the hiring of a team of ten professionals to build out our agency brokerage business, offering execution and brokerage services for cash equity and derivatives products.

In the new issue in advisory revenue category we earned $1.4 million in the second quarter, including engagements as a placement agent for a EUR68 million new issue for a European bank, and as an advisor to an alternative asset manager in an asset sale transaction. Our principal transactions and other revenue was $8.5 million, which included gains on our investments in Star Asia Finance, our Deep Value fund, and another Strategos principal position.

The revenue gains in our net trading and principal transactions activity more than offset the $1.4 million reduction in our asset management revenue from the prior year period, where we continue to experience a decline in revenue generated by our management of collateralized debt obligations. It is noteworthy that our Deep Value funds had a combined return of 5.5% during the second quarter of 2010, and that our Strategos platform ended the quarter with total net asset value under management of $498 million, up from $452 million at the end of 2009, and $161 million as of June 30 last year.

Our operating expenses for the quarter increased $8.9 million, or 40% from the prior year quarter. The increase includes a $6.6 million increase in comp and benefits, and a $2.1 million increase in professional services, subscriptions and other operating expenses. The increase in second quarter compensation and benefits is a direct result of significantly higher revenue for the quarter. The increase in professional services, subscriptions and other operating expenses are primarily the result of incremental costs of being a public company, and of continuing to recruit and hire professionals for our capital markets segment, as well as incremental costs related to our evaluation, consideration and closing of certain strategic transactions.

It is noteworthy that despite incurring meaningful expenses related to the strategic transactions announced last week, we were able to reduce our non-compensation expenses by approximately $500,000 from the first quarter of 2010. We remain very focused on controlling all of our expenses. In terms of non-operating income items, in the statement of operations during the quarter we recognized $836,000 of earn-out payments from the 2009 sale of our Emporia Management contracts. This amount represents the final payment of the total $1.5 million earn-out related to the subordinated fee payments.

In terms of our balance sheet, the restricted cash balance of $22.4 million is primarily collateral related to certain short positions that we had on the balance sheet at the end of the quarter. The receivables and payables from and to brokers, dealers and clearing agencies are primarily comprised of the net settlement receivables and payables from regular-way trades. These receivables and payables were settled in full in the early part of the third quarter. At the end of the quarter there were three components of the combined companies' consolidated indebtedness -- $9.5 million of Cohen Brothers sub debt; $49.6 million par value of Cohen & Company Inc. trust preferred obligations which are carried at $17.2 million on the balance sheet; and $21 million par value of Cohen & Company Inc. convertible debt, which is carried at $20.5 million on the balance sheet.

We believe that as of the end of the quarter, our unrestricted cash balance of $31 million, combined with the $15 million of cash provided from last week's transactions, is sufficient to fund our near-term business model. Our improved operating performance, combined with the strong capital position, contributed to our decision to declare a quarterly dividend of $0.05 per share. The dividend is payable on August 31 to shareholders of record on August 17th. Our stockholders' equity has grown from $77.7 million at the end of '09 to $86.6 million at June 30.

Now for a bit more color on the transactions we announced last Thursday -- we completed the sale of the collateral management rights relating to the Alesco X through XVII securitizations, which represented $3.8 billion of assets under management. Over the next two months, we will attempt to obtain the consent of equity holders in order to complete the sale of the rights relating to the Alesco I through IX securitizations, representing another $3 billion of assets under management. The buyer will pay us an aggregate sum of up to $9.5 million; $5.4 million has been paid for Alesco X through XVII; and $4.1 million can be paid for Alesco I through IX if sold. There's also an earn-out equal to 50% of all management fees collected over a seven-year period in excess of an agreed-upon amount.

Based on our current projections, and if the remaining nine securitizations are sold, we believe the earn-out portion of consideration has the potential to result in payments of up to $12 million during the seven-year period. Again, the agreement affects $6.8 billion or 47% of our $14.5 billion of assets under management; Alesco I through XVII in total generated $2.5 million or 40% of our $6.2 million of asset management revenue in the second quarter, with Alesco X through XVII representing $1.4 million of that number.

In connection with the sale, we also entered into a three-year service agreement under which we will provide certain services to the buyer. The buyer will pay us up to $23 million for these services over the three-year time period; $13.6 million for the X through XVII securitizations; and up to $9.4 million for the I through IX securitizations, if sold. The buyer has agreed to escrow the $23 million payable under the services agreement as the rights are sold.

To date, total cash received from the sales and the services agreement is $5.1 million. In addition $11.7 million has been deposited into escrow to be released ratably and monthly through February of 2013. All of the upfront cash received by us, as well as all the cash to be received from the services agreement, will be recognized as revenue on a straight line basis over the remaining term of the services agreement through February 2013. Any earn-out payments will be recognized as the amounts become due and payable, based on the terms of the agreement and the ultimate collection of management fees by the buyer.

As Daniel mentioned, we also entered into a new $14.6 million two-year secured credit facility. The new facility expires in September 2012, and replaces our existing $30 million facility that was due to expire in May of '11. The current minimum annual interest rate of the new facility is 6%, which is less than the minimum annual interest rate of 8.5% on the prior facility. The new facility is comprised of $13.3 million of term loan capacity and $1.3 million for the issuance of letters of credit. We have already drawn the first $9.3 million term loan. The remaining $4 million of term loan capacity may be drawn, depending on which of the remaining contractual rights relating to the Alesco I through IX securitizations are sold. We cannot borrow the remaining $4 million of term loan capacity after September 30, 2010.

The new credit arrangement provides more operating flexibility to the company than our prior facility. The prior arrangement restricted the amount of net capital we could invest in our broker dealer, and the amount of repo or other financing we could obtain in our broker dealer. The new arrangement does not have these restrictions. And finally, last Thursday we made a cash offer to purchase at 80% of par all $9.5 million of our sub notes due June 20, 2013. We expect to file our 10-Q no later than this Friday, August 6th. And I'll turn it back over to Daniel for some closing remarks before Q&A.

Okay. Thanks, Joe. Just to recap the highlights, we had $0.20 in earning this quarter or $0.47 for the first half. We declared a $0.05 dividend as we monetized 40% of our asset management revenue and raised cash to really deploy into our new businesses. We're happy with what we sold, and we're happy with what we retained. We feel the company continues to be positioned well as we grow new businesses in the capital markets. And we believe that there may be opportunities that are open for us, as a focused fixed income dealer, in the Financial Reform Bills. So on that note, I'll open it up to questions, Wes. Thank you.

(Operator Instructions)

And your first question comes from [Eric Foster] of [Helsey & Cabot].

Hi, Eric.

Hey, good morning. Congratulations -- solid quarter; great dividend; everything looks fabulous. But I don't think enough people really know the Cohen story. And what do you intend to do in terms of getting the word out, getting better or more aggressive IR? Or are you just going to let your earnings continue to expand and have people pick up on how undervalued your security is? Thank you very much.

Well, thanks for your comments. We certainly -- our basic intention is to try to get as many people interested in what we're doing. We've had now our second quarter of good results. We've had a strategic transaction that values 40% of our CDO asset management revenue at $44.5 million, which implies substantial greater value than in the 100% and even our market capitalization.

We have a growing fixed income broker-dealer business that continues to fill a niche in the marketplace and continues to find new niches to fill while being balanced out across the whole entire credit spectrum. And we've been busy certainly doing that while trying to reduce our expenses. Our intention is to try to get out and to talk to more people. We always welcome the opportunity to do so. One of the top priorities of the company over the next six months is certainly to try to do that.

Great, thank you.

Thank you.

Your next question comes from Mark Davis of Davis-Ross Investments.

Good morning. Looks like you did an excellent job this quarter and certainly transitioning the company well. How does the sale of Alesco affect your future expenses and income? What do you think the real impact is here on headcount? And I noticed yesterday that there was a statement by Cascade Bank Corp. of, they're going to be a nuisance here potentially going forward. What were your thoughts about the prospective legal action they talked about taking? Thank you.

Well, I'll just -- first, let's start with Cascade Bank. We don't make any comments publicly on any pending legal matters arising out of contract disputes. Let me turn it over to Joe to answer the rest of the questions.

Yes, in terms of the revenue, the P&L impact of the Alesco transactions, the accounting for the Alesco transaction is such that there'll be very little difference from the current run rate for the next three years as the total aggregate proceeds of the services agreement and the sale agreement will be amortized straight line into revenue through 2013. Comparing that to our current monthly run rate, it's maybe $50,000 to $75,000 more. The earn-out could provide incremental P&L.

And we announced our current projections are in the range of $12 million. Obviously that depends on the level of defaults and prepayments in those securitizations. In terms of expenses, we will still have some baseline level of expense to satisfy the terms of the services agreement. We're not anticipating meaningful cuts as a result of the Alesco transaction.

And certainly we're happy with all the people who have now remained with us in the management of these Alesco contracts, and believe our business, as it grows, especially as we do more things with banks and other financial institutions, insurance companies, we'll be able to proactively deploy them to generate more revenue.

Thank you.

Thank you.

Your next question comes from Dan Orlow of [Tensor].

Good morning. Congratulations on the quarter.

Hey, Dan.

Good morning. I just had three sort of questions. And I jumped on the call late, so my apologies if they've been covered. And we can pick it up offline. I certainly don't want to waste everyone's time. First is, could you talk a little bit about where you think the capital is best deployed? And in the context of that, is there a metric that we should be thinking about in terms of a metric of profitability going forward that you think is the right metric for investors to focus in on?

And the second sort of prong of this question is, as you think about redeploying some of the capital back in the businesses, how much of that do you think would be guided by the regulatory scheme as it's changed across the financial services landscape? And is this in the pattern of helping firms restructure for capital needs, or is it as other firms find it a more difficult environment to work in, is there just more niche market opportunities for you guys to pursue and teams that are available in the market that have lively books of businesses that just are looking for a friendlier environment? Thanks.

Okay. Well, I guess I'm going to -- if you don't mind, I'll just sort of regroup them into two sets of questions, one of which is, is there a metric that we can look at in terms of looking at net income? In our business, frankly, revenue is the most important metric that translates directly into net income. The way we'd like to think of our business, on the fixed income side or across the entire business, is we'd like to -- and it won't be a constant over the period -- manage to our compensation as a percentage of revenue, and then have a fixed -- and as small a fixed not as we can manage to overcome below that.

Our focus is really having as many "troops on the front line" as possible. We don't have a -- while we have done new issue business, we've done that without a large investment banking force. That's something we'll never have. So our goal is to keep our compensation marginal while our fixed not as small as possible.

And that's really the same over the growing asset management businesses and the continuing asset management businesses, as well as over our fixed income trading platform and our principal investment businesses, with probably less balancing out at some compensation metric number. But the biggest indicator will continue to be revenue. And then as to how we deploy the cash -- Joe, do you want to elaborate on that response in any way?

Well, the other thing I'd say about the -- I mean, the performance metrics that we focus on are normal income metric -- operating income. The one thing that I'd say is that our net income before minority interest, we focus on that more than the bottom line net income just because our minority interest is a little bit unconventional in that it's convertible one for one. So we're focused on operating income, adjusted operating income after backing out conventional non-cash items such as stock comp and depreciation/amortization.

Yes. And as management of the business, we're focused on minimizing our fixed expenses and keeping all of our revenues marginal to our compensation. And that's the way that we're certainly running this phase of the business. I would say -- well, what has our historic compensation rate been over the first two quarters?

65%.

Yes, so 65%, though it's subject to fluctuation. And as to how we're really going to deploy the cash that we've generated, I mean, there are three basic or four basic components. I think certainly we're looking to grow our trading book of business in areas where we think there's high volume ticket -- low margin, high volume. Or maybe not low margin, but small ticket size, higher volume business, where we think we can make money and really fill a need, touching as many customers as possible.

Secondly, you know, our model is the capital light model. So our goal is, we don't deploy capital in terms of facilitating large trades with customers. So the cash will be used in terms of increasing some of our ability to position bonds. But that's really secondary, not a primary use. Thirdly, you know, we continue to look to grow the business in whatever way possible in the asset management.

And fourthly, there may be uses for the capital on the principal investment side where we think that it adds to a growing business in the configuration of our business. I don't see any regulatory directive to deployment of capital. We may take advantage of opportunities to deploy capital in a new trading environment for derivatives.

Yes -- this is Chris -- I mean, it's -- as I said -- we're watching closely how things unfold with the derivatives legislation. It is potentially a whole new business line for us, and one that's been historically profitable for ten to 12 banks in the country. And the intent of the legislation it seems is to open that up to transparency and liquidity and a lot more competition. And so if that becomes a reality, that could be an opportunity for us.

And we think that like the other fixed income businesses we have, where it will require some amount of facilitation capital -- again, not huge principal investments or prop investments -- but rather, clients have a certain execution standard in mind when they want to deal with brokers, and you need some amount of facilitation capital in fixed income. That's the way that that business works. And though some have tried to do it without that, that only really works in certain points in time. So if we want to have high quality of trading revenue and hope that that is sustainable and be relevant to our clients, we need to have some amount of facilitation capital in our capital light strategy.

Yes, it's not a question about your discipline or prudence. I think that the numbers speak to that. It's really trying to gauge the size and scale of the market opportunity, given the fact that we know you'll -- given your own interest in the company I can't imagine you guys looking to shake a tree without thinking what's going to fall out of it.

Well, the potential area of opportunity is enormous. I mean, the credit markets -- which is, as we stated a couple of times, one of the reasons we focus on it -- are extremely large, diverse and profitable markets, both in the cash and the derivatives side. There's still a lot more we can do in the cash side obviously. We've only scratched the surface for both new issue and trading. But then opening it up to the derivatives market is enormous as well. I mean, it's literally a multi-billion-dollar-a-year business for eight to ten banks in the country.

I guess my point would be that this has not been a story for you about asset recovery values. This is actually, you're on the glide path of growth; both because of the change in the market architecture, as well as your own organic direction.

Yes. No, we feel that the configuration of Wall Street has left us with a real opportunity in front of us that we can continue in terms of these markets for years and years and years in the verticals that we operate today, augmenting them in things that are tangential to them.

Anyway, thanks. I'll go back in queue. Thanks for your time. Congratulations.

Thanks.

(Operator Instructions)

Our next question comes from [Herbert Lust] of [Greenwich Fine Arts].

Hello. I'm a private investor. I own about 100,000 shares. I've bought a little bit start since December through Alesco and invested in commercial REITs for 30 years. I want to say that your last conference call and this one are the best I ever heard. I mean, it's really thorough and very reassuring to investors.

The only question I have is, I always wondered how you handle this Alesco thing. There are billions of dollars. It wasn't reflected on your balance sheet. That's what interests me. If I'm understanding right, you're doing everything you can to get rid of Alesco and get it off -- it's off balance in some way or the other. But my question is very simple. How much of Alesco is left on your off balance sheet, and how are you going to handle it?

Well, in general, all of the -- when we talk about on balance sheet or off balance sheet, we're really looking at debt. The sale of the Alesco contracts were really the sale of the management of CDOs which are basically companies which have amalgamations of underlying fixed income instruments which are then financed. So in terms of looking at what effect that we have on balance sheet from the Alesco positions, we do have trading positions in Alesco from time to time, where we're facilitating trades for fixed income investors in the structured bonds that were issued by Alesco and other fixed income vehicles. But besides that, I believe it's almost zero. Joe?

Yes, no, that's right. The investments that the pre-merger Alesco had that prompted the consolidation of all those securitizations, when we deconsolidated post merger, we carry those on a single line at their fair value and they're virtually zero at this point.

This is Chris. Just one other point of clarification. So you know, the things that we sold in this recent transaction were management contracts that were owned by Cohen prior to the merger, not by Alesco, the merger partner. They relate to the management of a separate thing, Alesco CDOs. But there were management contracts that had been owned by Cohen for years.

Yes. And as to what debt that we have off balance sheet relating to this, I don't believe we have any debt off balance sheet relating to Alesco. Did that answer the question?

And at this time I'm showing no further questions. I'll turn the conference back to Mr. Cohen for any closing remarks.

Hey, well, thank you, everybody, for asking questions. We very much appreciate it. We like talking about our business. We like clarifying what we've been doing for investors. And now hopefully we'll go back to the large opportunity set that we have in front of us. Thank you. Bye-bye.

And, ladies and gentlemen, that concludes the Cohen & Company Second Quarter 2010 Earnings Conference Call. We appreciate your time. You may now disconnect.