EJF Investments Ltd GBP · LSE:EJFI
EJF Investments Ltd GBP — EJF Investments — Citywire Presentation 2025
28 slides from EJF Investments Ltd GBP's conference presentation, Feb 27, 2025
Slide 1: EJF Investments Limited Citywire Presentation
EJF Investments Limited (LN: “EJFI”) Citywire Presentation, 27 February 2025 www.ejfi.com
Slide 2: The Opportunity and Track Record
The Opportunity and Track Record EJFI: A Unique Income Opportunity With Lower Risk 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
Slide 3: EJFI Has An Experienced External Manager
EJFI Has An Experienced External Manager Founded in 2005 EJF Capital LLC (“EJF”) is a global institutional by Emanuel Friedman and Neal Wilson alternative asset management firm with a $5.4 billion compelling strategic approach and independent Approximate total firm AUM which includes global perspect
Slide 4: Shareholder Alignment
Shareholder Alignment The Manager is Strongly Aligned with Shareholders • EJF and its affiliates own ~26% of the Company’s ordinary shares. • The Manager has committed to use 20% of its management fee to purchase additional EJFI shares up to Q2 2025, as long as the average share price during the pri
Slide 5: Attractive Yield…Lower Risk
Attractive Yield…Lower Risk EJFI Offers an Attractive Cash Yield on Regulated Debt and Asset Management Fees. ~ 65% of EJFI’s Assets are In Regulated Debt of ~ 11% of EJFI’s Assets are in the Small Banks and Insurance Companies Management Fee Streams of EJF Affiliates ✓ Must be approved by regulator
Slide 6: Regulated Debt – Why Invest in U.S. Small Banks?
Regulated Debt – Why Invest in U.S. Small Banks? The U.S. Has Three Banking Regimes. EJF’S PRIMARY INVESTMENT FOCUS1 Small Regional GSIB/Money Center Bank Assets ($ 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: Why Invest in U.S. Small Banks?
Why Invest in U.S. Small Banks? EJF views the small bank market as if it were a coiled spring … ready to unleash its considerable stored-up energy. • Trump 2.0 • New financial regulators are less hostile to small bank M&A - Incoming FDIC Chair Travis Hill’s intentions are as per the below quoted on
Slide 8: U.S. Bank M&A Activity
U.S. Bank M&A Activity Overview of U.S. bank M&A activity across administrations Two of the last four years have seen the fewest bank M&A deals since the 1990s. We anticipate a rebound in deal activity, as small and regional bank share prices – the currency for M&A transactions – have risen during t
Slide 9: Why Invest in U.S. Financials Now?
Why Invest in U.S. Financials Now? • Investors generally are under exposed to Financials • Financials represent 14.1% of S&P 500. • FTSE 100 has 5 constituent bank names representing 11.81% of the index. • HSBC alone represents 7.17% of the index; the other 4 banks are Lloyds, Barclays, Schroders an
Slide 10: The Fundamentals of U.S. Small Banks Are Strong
The Fundamentals of U.S. Small Banks Are Strong. Please see important disclosures on pages 24-27. 9
Slide 11: Bank Fundamentals
Bank Fundamentals Deposits have become more valuable in the higher interest rate environment. Banks’ balance sheets are in a strong position. Sources: 1Cost of Deposits Compared to Effective Fed Funds: S&P Capital IQ Pro and Bloomberg 30 September 2024. 2Credit Quality of U.S. Commercial Banks: S&P
Slide 12: Bank Fundamentals
Bank Fundamentals The banking industry has limited historical losses on completed commercial real estate exposure compared to construction and development lending. Source: 1 S&P Capital IQ Pro as of 30 September 2024. Please see important disclosures on pages 24-27. 11
Slide 13: 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. Source: 1 S&P Capital IQ Pro as of 30 Sept
Slide 14: 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. Source: Federal Reserve 2024 DFAST Data and S&P Capital IQ Pro as of 30 September 2024. Please see important disclosures on pages 24-27. 13
Slide 15: 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 September 2024. Please see im
Slide 16: 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, 500 16,000 changes to regulations enabled Total Number of Institutions 14,000 Additions and Eliminations interstate b
Slide 17: 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 18: EJFI Portfolio Overview
EJFI Portfolio Overview Please see important disclosures on pages 24-27. 17
Slide 19: EJFI's Assets Have Attractive Risk/Reward Characteristics
EJFI’s Assets Have Attractive Risk/Reward Characteristics Risk profile of Amount % of Estimated EJFI Portfolio as of 31 January 2025 (£'million) Gross assets underlying Gross Yield12 exposure Floating & Fixed Rate Regulatory Debt issued by small 84.1 65% Baa3-Ba3 13% US banks and insurance companies
Slide 20: An Opportunistic Approach
An Opportunistic Approach EJFI has been opportunistic since its 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 rate
Slide 21: Looking Forward: CRT
Looking Forward: CRT Credit Risk In 2024, EJFI began investing in small bank CRT transactions. Although SRT/CRT 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 T
Slide 22: 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 28.9%). • This varies on how many shares one chooses to purchase. •
Slide 23: 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 of the Board • Retired as Vice Chairman of Affiliated Managers Group (NYSE: AMG) in 2015 after a 16-year career with AMG. Tax PricewaterhouseCoopers • Business and le
Slide 24: Contact Information Enquiries
Contact Information Enquiries EJF Investments Manager LLC Mungo Hargreaves mhargreaves@ejfcap.com For the Manager +44 203 752 6774 Jay Ghatalia jghatalia@ejfcap.com +44 203 752 6776 Panmure Liberum Darren Vickers ejfinvestments@panmureliberum.com +44 203 100 2222 For the Brokers Barclays Bank PLC Di
Slide 25: 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 26: 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 27: 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 28: 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