Ejf Investments Regulatory News (EJFI)

FOR IMMEDIATE RELEASE

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM THE UNITED STATES, ANY MEMBER STATE OF THE EUROPEAN ECONOMIC AREA (OTHER THAN THE REPUBLIC OF IRELAND), AUSTRALIA, CANADA, SOUTH AFRICA OR ANY OTHER JURISDICTION WHERE IT IS UNLAWFUL TO DO SO.

29 March 2023

EJF Investments Ltd

(the "Company" or "EJFI")

Exposure to Regional Banks

In response to recent events in the US and European banking markets, the Board of the Company believe it appropriate that additional disclosure on the Company's underlying positions in its Risk Retention exposures and market background be provided by EJF Investments Manager LLC (the "Manager"). Accordingly, the Company notes the following information from the Manager:

· The Company has no exposure to SVB Financial Group ("SVB") or Signature Bank ("Signature"), the two US Regional Banks that regulators put into receivership earlier this month ("US Regional Banks" being those US banks with assets between USD50bn and USD250bn). 

· The Company has no exposure to debt issued by European banks.

· The Company holds cash balances with BNP Paribas and Citi.

· Of the Risk Retention exposure within the collateral, which represents approximately 70% of the gross asset value of the Company as at 28 February 2023, there were 260 US banks and 113 insurance companies, of which 162 US banks and 41 insurance companies were unique issuers. 

· The largest exposure to any single bank is approximately 3% of the total outstanding underlying principal across all seven Risk Retention deals in which the Company is invested. 

· As published on 15 March, 2023, the Company's combined exposure to Silvergate Capital Corporation ("Silvergate"), which went into voluntary liquidation on 8 March, 2023, is equivalent to less than 2.5% of the Company's most recently published NAV on a look through basis, prior to any recoveries. The Manager currently believes there may be a recoverable value noting that both Silvergate's equity and preferred equity are currently trading with a positive economic value in the market, and that the Company's position is structurally senior to both of these.

· With respect to EJFI's remaining exposures, the Manager has identified three US Regional Banks, within the collateral, which may share some of the attributes of SVB and Signature: (1) a relatively concentrated deposit base; (2) a greater than average level of uninsured deposits; and (3) a greater than average held to maturity and/or available for sale securities portfolio that has unrealised losses as a result of the steep rise in interest rates. In combination, the exposure of the banks identified by the Manager of this nature is less than 9% of the Company's most recently published NAV on a look through basis. It is important to emphasise, however, that notwithstanding this identification, these banks remain operational.

· In addition, it is the Manager's belief that a distinction should be drawn between the business models of community banks and those of SVB, Signature, Silvergate and the three US Regional Banks discussed above. In general, community banks with less than USD50bn in assets have more secure and less monoline deposit bases.

· The Manager believes that the recent events will result in more regulatory changes and, in the long term, those changes will accelerate consolidation in the industry as risk and compliance costs increase. Although consolidation will continue, the Manager believes that community banks will continue to play an integral part of the US economic system.

· Furthermore, the Manager expects that these potential regulatory enhancements will serve to further buttress the strength of smaller, i.e. community banks, and medium sized banks in the US. Community banks represent a significant portion of total lending in the US: approximately 55% of commercial real estate loans; 29% of residential real estate loans; 24% of commercial and industrial loans; and 14% of consumer loans.

· Community banks also enjoy broad bipartisan political support, this sentiment being clearly articulated by the US Treasury Secretary, Janet Yellen, on 21 March 2023 in her testimony before Congress: "Large banks play an important role in our society, but so do small and mid-sized banks. These banks are heavily engaged in traditional banking services that provide vital credit and financial support to families and small businesses. They also increase competition in the banking sector and often have specialized knowledge and expertise in the communities they invest in. Indeed, many of these banks have played an important role in supporting our economic recovery."

ENQUIRIES

For the Manager

EJF Investments Manager LLC

Peter Stage / Jay Ghatalia

pstage@ejfcap.com / jghatalia@ejfcap.com

+44 203 752 6775 / +44 203 752 6776

For the Company Secretary and Administrator

BNP Paribas S.A., Jersey Branch

jersey.bp2s.ejf.cosec@bnpparibas.com

+44 1534 813 967 / +44 1534 709 189

For the Broker

Liberum Capital Limited

Darren Vickers / Owen Matthews

+44 (0) 20 3100 2218 / +44 (0) 20 3100 2223

About EJF Investments Ltd

EJFI is a registered closed-ended limited liability company incorporated in Jersey under the Companies (Jersey) Law 1991, as amended, on 20 October 2016 with registered number 122353. The Company is regulated by the Jersey Financial Services Commission (the "JFSC"). The JFSC is protected by both the Collective Investment Funds (Jersey) Law 1988 and the Financial Services (Jersey) Law 1998, as amended, against liability arising from the discharge of its functions under such laws.

The JFSC has not reviewed or approved this announcement.

LEI: 549300XZYEQCLA1ZAT25

Investor information & warnings

The latest available information on the Company can be accessed via its website at www.ejfi.com. 

This communication has been issued by, and is the sole responsibility of, the Company and is for information purposes only. It is not, and is not intended to be an invitation, inducement, offer or solicitation to deal in the shares of the Company. The price and value of shares in the Company and the income from them may go down as well as up and investors may not get back the full amount invested on disposal of shares in the Company. An investment in the Company should be considered only as part of a balanced portfolio of which it should not form a disproportionate part. Prospective investors are advised to seek expert legal, financial, tax and other professional advice before making any investment decision.