First Foundation Inc. Announces Reclassification of $1.9 Billion of Multifamily Portfolio to Loans Held for Sale and Conversion of Series B Noncumulative Convertible Preferred Stock to Common Stock
First Foundation Inc. (NYSE: FFWM) announced two significant developments:
1. The reclassification of $1.9 billion of its multifamily portfolio from loans held to maturity to loans held for sale. This strategic move aims to strengthen the company's balance sheet and improve flexibility. The company expects third quarter-end fair-value pricing to exceed 92% of the principal balance, although it will impact Q3 earnings and reduce tangible book value per share.
2. The conversion of all outstanding Series B Noncumulative Convertible Preferred Stock into 14,490,000 shares of common stock. This follows the Special Meeting of Stockholders held on September 30, 2024, and the conversion was completed on October 2, 2024.
The company also provided details on its current outstanding securities and a pro forma tangible book value per share of $10.20, adjusted for the July 2024 Capital Raise and preferred stock conversions.
First Foundation Inc. (NYSE: FFWM) ha annunciato due sviluppi significativi:
1. La riclassificazione di 1,9 miliardi di dollari del suo portafoglio multifamiliare da prestiti detenuti fino a scadenza a prestiti tenuti per la vendita. Questa mossa strategica mira a rafforzare il bilancio dell'azienda e a migliorare la flessibilità. L'azienda prevede che il valore equo di mercato alla fine del terzo trimestre superi il 92% del capitale prudenziale, anche se ciò influenzerà gli utili del terzo trimestre e ridurrà il valore contabile tangibile per azione.
2. La conversione di tutte le azioni privilegiate Serie B Noncumulative Convertible in 14.490.000 azioni ordinarie. Questo è avvenuto dopo la Riunione Straordinaria degli Azionisti tenutasi il 30 settembre 2024, e la conversione è stata completata il 2 ottobre 2024.
L'azienda ha anche fornito dettagli sulle sue attuali obbligazioni e un valore contabile tangibile pro forma per azione di 10,20 dollari, aggiustato per il capitale raccolto di luglio 2024 e le conversioni delle azioni privilegiate.
First Foundation Inc. (NYSE: FFWM) anunció dos desarrollos significativos:
1. La reclasificación de 1.9 mil millones de dólares de su cartera multifamiliar de préstamos mantenidos hasta el vencimiento a préstamos mantenidos para la venta. Este movimiento estratégico tiene como objetivo fortalecer el balance de la compañía y mejorar la flexibilidad. La empresa espera que el precio justo al final del tercer trimestre supere el 92% del balance principal, aunque esto impactará las ganancias del tercer trimestre y reducirá el valor contable tangible por acción.
2. La conversión de todas las acciones preferentes convertibles serie B en 14,490,000 acciones comunes. Esto siguió a la Junta Extraordinaria de Accionistas celebrada el 30 de septiembre de 2024, y la conversión se completó el 2 de octubre de 2024.
La compañía también proporcionó detalles sobre sus valores pendientes actuales y un valor contable tangible pro forma por acción de 10.20 dólares, ajustado por la recaudación de capital de julio de 2024 y las conversiones de acciones preferentes.
퍼스트 파운데이션 주식회사 (NYSE: FFWM)는 두 가지 중요한 발전을 발표했습니다:
1. 19억 달러 규모의 다가구 포트폴리오를 만기 보유 대출에서 판매 목적 대출로 재분류했습니다. 이 전략적 조치는 회사의 재무제표를 강화하고 유연성을 개선하는 것을 목표로 합니다. 회사는 3분기 말 공정 가치 평가가 원금의 92%를 초과할 것으로 예상하고 있지만, 이는 3분기 수익에 영향을 미치고 주당 실질 장부가치를 감소시킬 것입니다.
2. 모든 미발행 B 시리즈 비누적 전환 우선주를 14,490,000주로 전환했습니다. 이는 2024년 9월 30일에 열린 주주 특별회의 결과이며, 전환은 2024년 10월 2일에 완료되었습니다.
회사는 현재의 미발행 증권에 대한 세부정보와 2024년 7월 자본 조달 및 우선주 전환에 따라 조정된 주당 10.20달러의 형태의 실질 장부가치를 제공했습니다.
First Foundation Inc. (NYSE: FFWM) a annoncé deux développements significatifs :
1. La reclassement de 1,9 milliard de dollars de son portefeuille multifamilial de prêts détenus jusqu'à échéance en prêts détenus à la vente. Ce mouvement stratégique vise à renforcer le bilan de l'entreprise et à améliorer sa flexibilité. La société s'attend à ce que le prix de la juste valeur à la fin du troisième trimestre dépasse 92 % du montant principal, bien que cela ait un impact sur les bénéfices du T3 et réduise la valeur comptable tangible par action.
2. La conversion de toutes les actions privilégiées convertibles non cumulatives de la série B en 14 490 000 actions ordinaires. Cela fait suite à la réunion extraordinaire des actionnaires qui s'est tenue le 30 septembre 2024, et la conversion a été achevée le 2 octobre 2024.
L'entreprise a également fourni des détails sur ses titres en circulation actuels et une valeur comptable tangible pro forma par action de 10,20 $, ajustée pour l'augmentation de capital de juillet 2024 et les conversions d'actions privilégiées.
First Foundation Inc. (NYSE: FFWM) hat zwei bedeutende Entwicklungen bekannt gegeben:
1. Die Umklassifizierung von 1,9 Milliarden Dollar ihres Mehrfamilienportfolios von Darlehen, die bis zur Fälligkeit gehalten werden, zu Darlehen, die zum Verkauf gehalten werden. Dieser strategische Schritt soll die Bilanz des Unternehmens stärken und die Flexibilität verbessern. Das Unternehmen erwartet, dass die faire Bewertung zum Ende des dritten Quartals 92 % des Nennbetrags übersteigt, was jedoch die Ergebnisse des dritten Quartals beeinflussen und den materiellen Buchwert pro Aktie mindern wird.
2. Die Umwandlung aller ausstehenden nicht kumulierten wandelbaren Vorzugaktien der Serie B in 14.490.000 Stammaktien. Dies folgte der außerordentlichen Hauptversammlung, die am 30. September 2024 stattfand, und die Umwandlung wurde am 2. Oktober 2024 abgeschlossen.
Das Unternehmen veröffentlichte auch Details zu seinen aktuellen ausstehenden Wertpapieren und einen pro forma materiellen Buchwert von 10,20 US-Dollar pro Aktie, der für die Kapitalerhöhung im Juli 2024 und die Umwandlungen der Vorzugsaktien angepasst wurde.
- Strategic reclassification of $1.9 billion multifamily portfolio to strengthen balance sheet
- Expected fair-value pricing to exceed 92% of principal balance for reclassified loans
- Conversion of Series B Preferred Stock into common stock, simplifying capital structure
- Pro forma tangible book value per share of $10.20 after adjustments
- Loan reclassification will significantly impact Q3 earnings
- Reduction in 'as converted' tangible book value per share due to loan reclassification
Insights
The reclassification of
- Expected fair-value pricing above
92% of principal balance indicates a potential write-down of up to$152 million - This will substantially impact Q3 earnings and reduce tangible book value per share
- However, it provides options for securitization or sale, potentially maximizing long-term value
The conversion of Series B Preferred Stock to common stock simplifies the capital structure but dilutes existing shareholders. The pro forma tangible book value per share of
The decision to reclassify
- Renewed optimism for lower interest rates suggests improving conditions for multifamily assets
- Expected fair value above
92% indicates relatively strong demand for these assets - Short time to repricing (2.5-3 years) makes these loans attractive in the current rate environment
This move could signal a broader trend of financial institutions reassessing their real estate loan portfolios. For investors, it highlights the importance of monitoring regional real estate trends and their impact on bank balance sheets. The success of this strategy will depend on market conditions and execution over the next few quarters, potentially setting a precedent for similar actions by other lenders with significant multifamily exposure.
“Our decision to transfer these multifamily loans to held for sale marks an important next step in the Company's strategic roadmap to fortify the balance sheet and embrace a more offensive-minded posture,” said Scott F. Kavanaugh, CEO of First Foundation Inc. “We believe this move will position the Company for a return to its historical profitability and performance levels. Based on recent
The Company also announced today that, following its Special Meeting of Stockholders held on September 30, 2024, all of the issued and outstanding shares of the Company’s Series B Noncumulative Convertible Preferred Stock (“Series B Preferred Stock”) issued by the Company on July 8, 2024 in connection with its previously announced capital raise (the “July 2024 Capital Raise”) automatically converted into an aggregate of 14,490,000 shares of common stock, par value
Following this conversion, the following securities of the Company were issued and outstanding as of the close of business on October 2, 2024: 82,345,084 shares of Common Stock; 29,811 shares of the Company’s Series A Noncumulative Preferred Stock (“Series A Preferred Stock” and, together with the Series B Preferred Stock, the “Preferred Stock”), each share of which is automatically convertible into 1,000 shares of Common Stock in the event of a transfer by the holder thereof consistent with the rules and limitations of Regulation Y and the Bank Holding Company Act of 1956, as amended, subject to certain limitations (a “Reg Y Transfer”), and all of which shares of Series A Preferred Stock represent the right (on an as converted basis) to receive approximately 29,811,000 shares of Common Stock; and net-settled warrants (the “Warrants”), which are not exercisable until January 5, 2025, affording the holder thereof the right, until July 8, 2031, to purchase a total of 22,239 shares of a new class of non-voting, common-equivalent preferred stock of the Company (“Series C NVCE Stock”), each share of which is convertible into 1,000 shares of Common Stock in a Reg Y Transfer, and all of which shares of Series C NVCE Stock, upon issuance, will represent the right (on an as converted basis) to receive 22,239,000 shares of Common Stock.
The following table shows First Foundation’s pro forma tangible book value as of June 30, 2024, as adjusted to reflect the July 2024 Capital Raise and the conversion of the shares of Series A Preferred Stock and Series B Preferred Stock into shares of Common Stock. The following table does not reflect the Loan Reclassification, the issuance of Series C NVCE Stock upon exercise of the Warrants or the issuance of Common Stock upon the conversion of Series C NVCE Stock.
Pro Forma Tangible Book Value Per Share (unaudited) |
||||
Shareholders’ Equity as of June 30, 2024: |
|
|
||
(in thousands, except per share amounts and number of shares outstanding) |
|
|
||
Shareholders’ Equity |
$ |
933,244 |
|
|
Less: Intangible Assets |
|
(4,222 |
) |
|
Tangible Common Equity(1) |
$ |
929,022 |
|
|
|
|
|
||
Add: July 2024 Capital Raise: |
|
|
||
Series A Preferred Equity |
$ |
87,888 |
|
|
Series B Preferred Equity |
|
42,719 |
|
|
Common Equity(2) |
|
84,446 |
|
|
Total Equity from July 2024 Capital Raise |
$ |
215,053 |
|
|
Total Tangible Common Equity (as adjusted) |
$ |
1,144,075 |
|
|
|
|
|
||
Common Shares Outstanding as of June 30, 2024: |
|
56,543,382 |
|
|
Common Shares Issued in the July 2024 Capital Raise and upon Conversion of Preferred Shares: |
|
|
||
Common Shares underlying the Series A Preferred Shares |
|
29,811,000 |
|
|
Common Shares underlying the Series B Preferred Shares |
|
14,490,000 |
|
|
Common Shares |
|
11,308,676 |
|
|
Common Shares Outstanding (as adjusted)(3) |
|
112,153,058 |
|
|
|
|
|
||
Pro Forma Tangible Book Value Per Share (as adjusted) |
$ |
10.20 |
|
|
(1) |
Non-GAAP financial measure |
|
(2) |
Includes common stock, additional paid-in-capital and other non-preferred shareholders’ equity accounts |
|
(3) |
Excludes (a) 22,239,000 shares of common stock issuable upon conversion of 22,239 shares of Series C Preferred Stock issuable upon exercise of the Warrants issued in the July 2024 Capital Raise at the exercise price of |
About First Foundation
First Foundation Inc. (NYSE: FFWM) and its subsidiaries offer personal banking, business banking, and private wealth management services, including investment, trust, insurance, and philanthropy services. This comprehensive platform of financial services is designed to help clients at any stage in their financial journey. The broad range of financial products and services offered by First Foundation are more consistent with those offered by larger financial institutions, while its high level of personalized service, accessibility, and responsiveness to clients is more aligned with community banks and boutique wealth management firms. This combination of an integrated platform of comprehensive financial products and personalized service differentiates First Foundation from many of its competitors and has contributed to the growth of its client base and business. Learn more at firstfoundationinc.com or connect with us on LinkedIn and Twitter.
Forward-Looking Statements
This press release includes forward-looking statements within the meaning of the “Safe-Harbor” provisions of the Private Securities Litigation Reform Act of 1995, including forward-looking statements regarding our expectations and beliefs about the quarter-end fair-value pricing of the loans transferred to held for sale, potential loans sales and our future financial performance, financial condition and plans. Forward-looking statements often include words such as "believe," "expect," "anticipate," "intend," "plan," "estimate," "project," "outlook," or words of similar meaning, or future or conditional verbs such as "will," "would," "should," "could," or "may." The forward-looking statements in this press release are based on current information and on assumptions that we make about future events and circumstances that are subject to a number of risks and uncertainties that are often difficult to predict and beyond our control. As a result of those risks and uncertainties, our actual financial results and activities in the future could differ, possibly materially, from those expressed in or implied by the forward-looking statements contained in this press release and could cause us to make changes to our future plans. Those risks and uncertainties include, but are not limited to, the risk of incurring credit losses, which is an inherent risk of the banking business; the quality and quantity of our deposits; adverse developments in the financial services industry generally such as bank failures and any related impact on depositor behavior or investor sentiment; risks related to the sufficiency of liquidity; risk that we will not be able to grow at historic rates or at all; the risk that we will not be able to access the securitization market or otherwise sell loans on favorable or anticipated terms or at all; changes in general economic conditions, including real estate values, either nationally or locally in the areas in which we conduct or will conduct our business; risks associated with changes in interest rates, which could adversely affect our interest income, interest rate margins, and the value of our interest-earning assets, and therefore, our future operating results; the risk that the performance of our investment management business or of the equity and bond markets could lead clients to move their funds from or close their investment accounts with us, which would reduce our assets under management and adversely affect our operating results; negative impacts of news or analyst reports about us or the financial services industry; the impacts of inflation on us and our customers; results of examinations by regulatory authorities and the possibility that such regulatory authorities may, among other things, limit our business activities or our ability to pay dividends, or impose fines, penalties or sanctions; the risk that we may be unable or that our board of directors may determine that it is inadvisable to pay future dividends at historic levels or at all; risks associated with changes in income tax laws and regulations; and risks associated with seeking new client relationships and maintaining existing client relationships.
Additional information regarding these and other risks and uncertainties to which our business and future financial performance are subject is contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, and other documents we file with the SEC from time to time. We urge readers of this report to review those reports and other documents we file with the SEC from time to time. Also, our actual financial results in the future may differ from those currently expected due to additional risks and uncertainties of which we are not currently aware or which we do not currently view as, but in the future may become, material to our business or operating results. Due to these and other possible uncertainties and risks, readers are cautioned not to place undue reliance on the forward-looking statements contained in this report, which speak only as of today's date, or to make predictions based solely on historical financial performance. We also disclaim any obligation to update forward-looking statements contained in this report or in the above-referenced reports, whether as a result of new information, future events or otherwise, except as may be required by law or NYSE rules.
View source version on businesswire.com: https://www.businesswire.com/news/home/20241003427621/en/
Investor contact:
Jamie Britton, CFO, jbritton@ff-inc.com, (949) 476-0300
Source: First Foundation Inc.
FAQ
What is the size of the multifamily portfolio First Foundation (FFWM) reclassified to loans held for sale?
When did First Foundation (FFWM) convert its Series B Preferred Stock to common stock?
How many shares of common stock were issued in the conversion of First Foundation's (FFWM) Series B Preferred Stock?
What is First Foundation's (FFWM) pro forma tangible book value per share after recent adjustments?
