First Foundation Inc. announced today the reclassification of $1.9 billion in principal balance from its multifamily loan portfolio to loans held for sale. This strategic move is intended to fortify the company's balance sheet and position it for a return to historical profitability levels, according to CEO Scott F. Kavanaugh. The reclassification is expected to result in a $117.5 million fair value adjustment, or LOCOM adjustment, impacting third-quarter earnings.
The company anticipates that the fair-value pricing for these reclassified loans will surpass 92% of the principal balance, providing flexibility to explore various options for securitizing or selling the loans. This action aims to maximize final execution pricing and reduce exposure to fixed-rate assets. The resulting write-down will reduce the company's 'as converted' tangible book value per share.
Additionally, First Foundation announced the automatic conversion of all issued and outstanding shares of its Series B Noncumulative Convertible Preferred Stock into an aggregate of 14,490,000 shares of common stock. This conversion occurred as of the close of business on October 2, 2024, following a Special Meeting of Stockholders held on September 30, 2024, and was part of the July 2024 Capital Raise.
The content on BeyondSPX is for informational purposes only and should not be construed as financial or investment advice. We are not financial advisors. Consult with a qualified professional before making any investment decisions. Any actions you take based on information from this site are solely at your own risk.