Cohen & Company (COHN) 8-K Results of Operations and Financial Condition

Exhibit 99.1

For:	Sunset Financial Resources
Contact:	Michael Pannell
	Chief Financial Officer
	(904) 425-4349
	mpannell@sfous.com
	Jeffrey Goldberger / Michael Cimini
	KCSA Worldwide
	(212) 896-1249 / (212) 896-1233
	jgoldberger@kcsa.com / mcimini@kcsa.com

For Immediate Release

Sunset Financial Resources Reports Fourth Quarter 2004

And Year-End Results

- - -

Company Declares Fourth Quarter Dividend of $0.20 per Share

JACKSONVILLE, Fla., March 11, 2005 — Sunset Financial Resources, Inc. (NYSE: SFO) reported net income for the quarter ended December 31, 2004, of $583,000, or $0.06 per diluted share, compared to net income of $1.43 million for the period ended September 30, 2004. Net income for the year ended December 31, 2004 was $644,000.

On March 10, the Company’s Board of Directors declared a fourth quarter dividend of $0.20 per common share versus a third quarter dividend of $0.05 per common share. The dividend is payable on March 31, 2005 to shareholders of record on March 21, 2005.

Results for the 2004 fourth quarter include a loan loss provision of approximately $1.1 million in the Company’s commercial portfolio. In addition, the Company recorded a one-time charge of $365,000 related to severance.

Bert Watson, Chairman, President and CEO, said, “We are pleased to have completed our first year as a public company and establish a strong operating platform that will enable us to build upon our future performance. Results in 2004 demonstrate Sunset’s ability to deliver solid returns at a time when challenging market conditions began to rise. We believe the approximate $119 million in net proceeds raised from our IPO in March 2004 will help drive strong future growth.”

As of December 31, 2004, Sunset’s total assets had increased to $893 million (including $614 million of investments in Mortgage Backed Securities; $204 million of residential mortgage related loans and $45 million of commercial bridge loans). As of September 30, 2004, Sunset’s total assets were $684 million (including $391 million of investments in Mortgage Backed Securities; $219 million of residential mortgage related loans and $60 million of commercial bridge loans). Total common shares outstanding remained at 10,450,000.

“We look forward to building shareholder value in 2005. The Company will continue to review its business plan and operating procedures to maximize results. Our strategy is to leverage our balance sheet and expand our portfolio of residential and short-term commercial mortgage loans. During December, our residential mortgage portfolio was leveraged approximately 9.4, within our stated target range, and our commercial portfolio was leveraged approximately 0.3, which we expect to increase in 2005. We are confident in our ability to increase income as we build our asset base and generate solid net interest income,” Watson added.

For the quarter ended December 31, 2004, the yield on average earning assets was 4.46% and the cost of funds was 3.03%, which equates to an interest rate spread of 1.43%. Sunset’s book value per share at December 31, 2004 was $11.41, compared to $11.36 per share as of September 30, 2004. The Company’s stock price at the close of market trading on March 10, 2005 was $9.70 per share.

Sunset Financial has scheduled a conference call to discuss its fourth quarter year-end financial results at 10:00 a.m. ET on March 11, 2005. Bert Watson, Chairman, President and Chief Executive Officer, will host the conference call. Those wishing to listen to the conference call by telephone may dial 1-800-573-4752 and the reservation number is 41876900. Please call ten minutes prior to the scheduled conference call time. The conference call will also be archived on the Company’s web site for 30 days following the call at http://www.sunsetfinancial.net.

About Sunset Financial Resources, Inc.

Sunset Financial Resources, Inc. is a self-managed real estate investment trust (REIT) that went public on March 17, 2004. Sunset Financial Resources seeks to deliver attractive dividend income and steady growth to its shareholders through the acquisition and management of a portfolio of high quality residential mortgage loans and well secured commercial mortgage bridge loans in the United States.

Forward-Looking Statements:

Certain statements in this news release may constitute “forward-looking statements” within the meaning of the federal securities laws and involve risks, uncertainties and other factors, which may cause the actual performance of Sunset Financial Resources, Inc. to be materially different from the performance expressed or implied by such statements. These risks include the failure of the Company to successfully execute its business plan, gain access to additional financing, the availability of additional loan portfolios for future acquisition, continued qualification as a REIT, the cost of capital, as well as the additional risks and uncertainties detailed in the Company’s periodic reports and registration statements filed with the Securities and Exchange Commission.

(Tables Follow)

Sunset Financial Resources, Inc

Consolidated Balance Sheets

(dollar amounts in thousands)

	December 31, 2004			December 31, 2003
Assets
Mortgage assets
Mortgage backed securities, available for sale	$	614,154		$	—
Securitized hybrid adjustable rate mortgages		201,381			—
Hybrid adjustable rate residential mortgages		1,286			—
Fixed rate residential mortgages		1,045			—
Commercial mortgages		44,522			—
Total mortgage assets		862,388			—
Allowance for loan losses		(1,333	)		—
Net mortgage assets		861,055			—
Cash and cash equivalents		25,700			44
Interest receivable		2,676			—
Fixed assets, net		861			16
Other assets		484			255
Hedging assets		2,716			—
Total assets	$	893,492		$	315
Liabilities
Whole loan financing facility	$	9,718		$	—
Reverse repurchase agreements		761,205			—
Notes payable to stockholders		—			145
Hedging liabilities		944			—
Accured liabilities		2,367			144
Total liablilities		774,234			289
Commitments		—			—
Shareholders’ equity
Preferred stock, $.001 par value, authorized 50,000,000; no shares outstanding		—			—
Common stock, $.001 par value, authorized 100,000,000; 10,450,000 and 466,667 outstanding, respectively		10			1
Additional paid in capital		119,219			47
Accumulated other comprehensive income		87			—
Retained earnings		(58	)		(22	)
Total shareholders’ equity		119,258			26
Total liabilities and shareholders’ equity	$	893,492		$	315

Sunset Financial Resources, Inc

Consolidated Statement of Operations (unaudited)

(dollar amounts in thousands, except per share amounts)

	Year ended December 31, 2004		Year ended December 31, 2003
Interest and fee income	$	18,233
Interest expense		9,842		—
Net interest income		8,391		—
Provision for loan losses		1,333		—
Net interest income after provision		7,058		—
Securities gains		686		—
Operating expenses
Salaries and employee benefits		2,864		—
Professional fees		1,151		—
Other		2,720		22
Special charge		365		—
Total operating expenses		7,100		22
Net income (loss)	$	644	$	(22	)
Basic earnings per share		0.08		(0.05	)
Diluted earnings per share		0.07		(0.05	)
Weighted average basic shares		8,377		467
Weighted average diluted shares		8,397		467

Sunset Financial Resources, Inc

Consolidated Balance Sheets

(dollar amounts in thousands)

	March 31, 2004		June 30, 2004		September 30, 2004		December 31, 2004
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Assets
Mortgage assets
Mortgage backed securities, available for sale	—		128,431		391,065		614,154
Securitized hybrid adjustable rate mortgages	—		223,041		211,377		201,381
Hybrid adjustable rate residential mortgages	149,996		1,292		1,288		1,286
Fixed rate residential mortgages	6,144		5,832		5,803		1,045
Commercial mortgages	11,500		39,260		59,469		44,522
Total mortgage assets	167,640		397,856		669,002		862,388
Allowance for loan losses	(15	)	(64	)	(149	)	(1,333	)
Net mortgage assets	167,625		397,792		668,853		861,055
Cash and cash equivalents	49,430		17,986		11,387		25,700
Interest receivable	577		1,523		1,346		2,676
Fixed assets, net	662		764		739		861
Other assets	49		2,377		1,193		484
Hedging assets	138		2,953		876		2,716
Total assets	218,481		423,395		684,394		893,492
Liabilities
Whole loan financing facility	100,423		—		10,468		9,718
Reverse repurchase agreements	—		301,589		551,827		761,205
Notes payable to stockholders	—		—		—		—
Hedging liabilities	—		350		2,408		944
Accured liabilities	616		1,035		1,025		2,367
Total liablilities	101,039		302,974		565,728		774,234
Commitments	—		—		—		—
Shareholders’ equity
Preferred stock, $.001 par value, authorized 50,000,000; no shares outstanding	—		—		—		—
Common stock, $.001 par value, authorized 100,000,000; 10,450,000 and 466,667 outstanding, respectively	10		10		10		10
Additional paid in capital	118,948		119,057		119,138		119,219
Accumulated other comprehensive income	49		2,748		(364	)	87
Retained earnings	(1,565	)	(1,394	)	(118	)	(58	)
Total shareholders’ equity	117,442		120,421		118,666		119,258
Total liabilities and shareholders’ equity	218,481		423,395		684,394		893,492
Book value per share	11.24		11.52		11.36		11.41
Leverage	0.9		2.5		4.8		6.5

Sunset Financial Resources, Inc

Consolidated Statement of Operations (unaudited)

(dollar amounts in thousands, except per share amounts)

	First		Second		Third		Fourth		Full Year
Interest and fee income	44		3,058		5,989		9,142		18,233
Interest expense	32		1,345		3,118		5,347		9,842
Net interest income	12		1,713		2,871		3,795		8,391
Provision for loan losses	15		49		85		1,184		1,333
Net interest income after provision	(3	)	1,664		2,786		2,611		7,058
Securities gains	—		—		403		283		686
Operating expenses
Salaries and employee benefits	902		543		660		759		2,864
Professional fees	224		315		349		263		1,151
Other	414		635		747		924		2,720
Special charge	—		—		—		365		365
Total operating expenses	1,540		1,493		1,756		2,311		7,100
Net income (loss)	(1,543	)	171		1,433		583		644
Averages and yields/costs
Residential assets	NM		223,720		476,388		754,493		NM
Yield	NM		3.79	%	4.04	%	4.25	%	NM
Commercial assets	NM		33,671		42,003		52,839		NM
Yield	NM		11.09	%	10.24	%	7.72	%	NM
Earning assets	NM		267,312		535,385		815,065		NM
Yield	NM		4.60	%	4.45	%	4.46	%	NM
Borrowings	NM		163,380		422,786		701,937		NM
Interest	NM		2.02	%	1.58	%	2.16	%	NM
Swaps	NM		0.90	%	1.20	%	0.78	%	NM
Fees	NM		0.39	%	0.15	%	0.09	%	NM
Total	NM		3.31	%	2.93	%	3.03	%	NM
Net interest margin	NM		2.58	%	2.13	%	1.85	%	NM
Net interest spread	NM		1.29	%	1.52	%	1.43	%	NM

Investment securities

	Agency Securities		Non Agency Securities		Total
Par	510,347		96,013		606,360
Unamortized premium	8,778		788		9,566
Unamortized discount	(689	)	(21	)	(710	)
Amortized cost	518,436		96,780		615,216
Gross unrealized gains	709		14		723
Gross unrealized losses	(1,456	)	(329	)	(1,785	)
Estimated fair value	517,689		96,465		614,154
Investment securities - repricing characteristics
Floating rate	70,040
Five year ARM	544,114
	614,154
Residential Loans
	Par		Prem/disc		Book value
Fixed rates	1,017		28		1,045
Three year ARM	10,336		297		10,633
Five year ARM	71,735		1,997		73,732
Seven year ARM (and other)	117,389		913		118,302
Total residential loans	200,477		3,235		203,712
Commercial loans
	Balance		Location		Participation
Retail mall	14.7		FL		No
Resort development	10.0		NC		Yes
Conference center	8.1		FL		No
Cemetery / funeral home	5.7		HI		Yes
Multi sports facility	4.7		NJ		No
Apartments	1.5		IL		No
Total	44.7

Sunset Financial Resources

Problem assets

	Residential		Commercial		Total
30-59	1,607		—		1,607
60-89	—		—		—
90+	160		—		160
Total delinquent	1,767		—		1,767
Nonaccrual	—		18,524		18,524
Total Loans	203,712		44,522		248,234
As a percent
Delinquent	0.87	%	0.00	%	0.71	%
Nonaccrual	0.00	%	41.61	%	7.46	%