EJF Investments Ltd GBP · LSE:EJFI
EJF Investments Ltd GBP — EJF Investments — Citywire Presentation (September 2024)
26 slides from EJF Investments Ltd GBP's conference presentation, Sep 3, 2024
Slide 1: EJF Investments Limited (LN: EJFI)
EJF Investments Limited (LN: “EJFI”) www.ejfi.com
Slide 2: The Opportunity
The Opportunity EJFI: A Unique Income Opportunity With Lower Risk1 and Upside Potential EJF Investments Ltd (“EJFI” or the “Company”, together with its subsidiary the “Group”) owns a diverse portfolio of assets that provide attractive risk-adjusted cash flows, which are passed on to shareholders in
Slide 3: EJFI Has An Experienced External Manager
EJFI Has An Experienced External Manager Founded in 2005 by Emanuel Friedman and Neal Wilson EJF Capital LLC (“EJF”) is a global institutional alternative asset management firm with a $6.0 billion compelling strategic approach and independent Approximate total firm AUM which includes $3.2 billion in
Slide 4: Shareholder Alignment
Shareholder Alignment The Manager is Strongly Aligned with Shareholders • EJF and its affiliates own ~26% of the Company’s ordinary shares. • The Manager has committed to use 20% of its management fee to purchase additional EJFI shares up to Q2 2025, as long as the average share price during the pri
Slide 5: Attractive Yield…Lower Risk
Attractive Yield…Lower Risk EJFI Offers an Attractive Cash Yield on Regulated Debt and Asset Management Fees. ~ 66% of EJFI’s Assets are In Regulated Debt of ~ 11% of EJFI’s Assets are in the Small Banks and Insurance Companies Management Fee Streams of EJF Affiliates ✓ Must be approved by regulator
Slide 6: Regulated Debt – Why Invest in U.S. Small Banks?
Regulated Debt – Why Invest in U.S. Small Banks? The U.S. Has Three Banking Regimes. EJF’S PRIMARY INVESTMENT FOCUS1 Small Regional GSIB/Money Center Bank Assets ($ B) $0-50 $50-250 $250 + Number of banks / 4,272 27 14 Assets2 $5.5 Trillion $3.4 Trillion $17.9 Trillion Banks $100-$250 B subject to S
Slide 7: The Fundamentals of U.S. Small Banks Are Strong.
The Fundamentals of U.S. Small Banks Are Strong. Please see important disclosures on pages 22-25. 6
Slide 8: Bank Fundamentals
Bank Fundamentals COST OF DEPOSITS COMPARED TO EFFECTIVE FED FUNDS 7.0 6.0 Deposits have 5.0 become more 4.0 valuable in the 3.0 2.0 higher interest rate 1.0 environment. - 2011Q1 2012Q1 2000Q1 2000Q3 2001Q1 2001Q3 2002Q1 2002Q3 2003Q1 2003Q3 2004Q1 2004Q3 2005Q1 2005Q3 2006Q1 2006Q3 2007Q1 2007Q3 2
Slide 9: Bank Fundamentals
Bank Fundamentals The banking industry has limited historical losses on completed commercial real estate exposure compared to construction and development lending. CRE AND CONSTRUCTION NET CHARGE-OFF RATIO 6.00% 5.50% 5.00% 4.50% 4.00% 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% -0.50% Completed
Slide 10: Bank Fundamentals
Bank Fundamentals So far this cycle, CRE losses have been concentrated in the largest, institutional office properties, which are primarily financed by the largest banks with the ability to do a loan large enough for an urban, multi-tenant office building. CRE Net Charge-Off Ratio by Bank Asset Size
Slide 11: Bank Fundamentals
Bank Fundamentals Assumed Loan Loss Rate in Latest Stress Test Compared to Historical 9 Quarter Loan Losses for All U.S. Commercial Banks. 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 2011Q4 2015Q3 1993Q1 1993Q4 1994Q3 1995Q2 1996Q1 1996Q4 1997Q3 1998Q2 1999Q1 1999Q4 2000Q3 2001Q2 2002Q1 2002Q4 2003
Slide 12: Bank Fundamentals
Bank Fundamentals Post COVID-19 TCE and Tier 1 leverage ratios have rebounded. U.S. Commercial Banks TCE and Leverage Ratios 10.50% 10.00% 9.50% 9.00% 8.50% 8.00% 7.50% 7.00% 6.50% TCE Ratio TCE Ratio* Excl. AOCI Tier 1 Leverage Ratio Source: S&P Capital IQ Pro as of 30 June 2024. 11 Please see impo
Slide 13: Secular Consolidation of Banks in the U.S.
Secular Consolidation of Banks in the U.S. Robust bank M&A activity and few new bank charters continues to lead to a decline in the number of banks. 1,000 20,000 18,000 In the 1990s, changes to 500 16,000 regulations enabled Total Number of Institutions interstate banking, 14,000 Additions and Elimi
Slide 14: Shadow Banking System
Shadow Banking System Post the Global Financial Crisis (“GFC”), increased regulation and lower interest rates made U.S. commercial banks less competitive versus non-bank lenders, who took market share. Regulatory pressure has led to stronger underwriting standards and robust capital and liquidity le
Slide 15: EJFI Portfolio Overview
EJFI Portfolio Overview Please see important disclosures on pages 22-25. 14
Slide 16: EJFI’s Assets Have Attractive Risk/Reward Characteristics
EJFI’s Assets Have Attractive Risk/Reward Characteristics Risk profile of Amount % of Estimated Estimated EJFI Portfolio as of 31 July 2024 (£'million) Gross assets underlying Gross Yield1,3 Net Yield2,3 exposure Floating & Fixed Rate Regulatory Debt issued by small 82.7 66% Baa3-Ba3 15% 12% US bank
Slide 17: EJFI Track Record
EJFI Track Record EJFI Has A Long-Term Track Record Of Performance. EJFI Total NAV Return1 120.00 100.00 80.00 60.00 40.00 20.00 - Jul-17 Jul-18 Jul-19 Jul-20 Jul-21 Jul-22 Jul-23 Jul-24 Jan-18 Jan-19 Jan-20 Jan-21 Jan-22 Jan-23 Jan-24 Oct-17 Oct-18 Oct-19 Oct-20 Oct-21 Oct-22 Apr-23 Oct-23 Apr-17 A
Slide 18: An Opportunistic Approach
An Opportunistic Approach EJFI has been opportunistic since inception. Closed-end fund listed on the London Stock Exchange in April 2017 • EJFI initially invested primarily in regulated debt issued by US small banks and insurance companies. • Prior to the Federal Reserve increasing interest rates at
Slide 19: Looking Forward: CRT
Looking Forward: CRT In 2024, EJFI began investing in small bank CRT transactions. Although SRT/CRT Credit Risk transactions have been a tool utilised by banks in Europe since the GFC, CRTs are a Transfer (“CRT”) nascent strategy in the US and with small banks in particular. Such transactions have l
Slide 20: The Risks of Investing in EJFI
The Risks of Investing in EJFI Liquidity Risk Mitigation • The liquidity in EJFI shares is modest. • In the Manager’s opinion, the risks posed by EJFI’s shares are more than offset by the discount at which they trade (approximately • This varies on how many shares one 41%). chooses to purchase. • If
Slide 21: EJFI Board and Advisory Team
EJFI Board and Advisory Team Independent Board Of Directors Advisers & Service Providers to EJFI John Kingston III Auditor KPMG Chair Designate of the Board (subject to JFSC approval) • Retired as Vice Chairman of Affiliated Managers Tax PricewaterhouseCoopers Group (NYSE: AMG) in 2015 after a 16-ye
Slide 22: Contact Information
Contact Information Enquiries EJF Investments Manager LLC Adeeb Ahmed aahmed@ejfcap.com For the Manager +44 203 752 6774 Jay Ghatalia jghatalia@ejfcap.com +44 203 752 6776 Barclays Bank PLC Dion Di Miceli / Stuart Muress / James Atkinson BarclaysInvestmentCompanies@barclays.com +44 20 7623 2323 For
Slide 23: Legal Disclosures
Legal Disclosures PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS, WHICH MAY VARY. THIS PRESENTATION AND ITS CONTENTS ARE NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM AUSTRALIA, CANADA, SOUTH AFRICA, THE EUROPEAN ECONOMIC AREA ("E
Slide 24: Legal Disclosures
Legal Disclosures Statements of historical events are strategy and fund specific and may not apply to all products and services offered by the Company, the Manager or EJF. Certain statements may contain performance calculations which were prepared by EJF and contain assumptions about future delinque
Slide 25: Legal Disclosures
Legal Disclosures This presentation does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United States. The securities mentioned herein have not been, and will not be, registered under the US Securities Act of 1933, as amended (the "US Securities Act") or wit
Slide 26: Legal Disclosures
Legal Disclosures Each of Barclays Bank PLC, which is authorised by the Prudential Regulation Authority (the “PRA”) and regulated in the United Kingdom by the Financial Conduct Authority (the “FCA”) and the PRA, and Liberum, which is authorised and regulated in the United Kingdom by the FCA (togethe
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