IRVINE, Calif. HONOLULU First Foundation Inc. (NASDAQ: FFWM), a financial services company that provides investment management, wealth planning, consulting, trust, and banking services primarily to high-net-worth individuals and businesses (#x201C;FFI#x201D;), and Pacific Rim Bank, a full-service community bank located in Honolulu, Hawaii, today jointly announced the execution of a definitive agreement and plan of merger whereby Pacific Rim Bank will merge with and into First Foundation Bank, a wholly owned subsidiary of FFI.
#x201C;This strategic partnership provides First Foundation with an excellent opportunity to build on our existing client base in Hawaii,#x201D; said Scott Kavanaugh, Chairman and CEO of First Foundation. #x201C;We are thrilled at the opportunity to now have a local presence in Honolulu from which to deliver our comprehensive platform of bank, trust, and wealth management solutions. Hawaii has been an important region for us and we are committed to serving the unique financial needs of its thriving business community as well as expanding programs available to local non-profits.#x201D;
Austin Imamura, CEO of Pacific Rim Bank, added, #x201C;We are pleased to announce this strategic partnership with an organization that will expand resources to the people and businesses in Hawaii by a local team, offering First Foundation#x2019;s integrated wealth management, trust, and insurance services. The merger will also expand bank deposit and lending capabilities, allowing us to be more competitive in our market. Because of its financial strength and profitable history with much of its growth still before it, First Foundation makes for an ideal financial partner. The merger will also enhance the legacy of our vision which allows us to accomplish our business objectives for Hawaii, and to preserve our community development projects, church, and other humanitarian involvement that our bank was originally founded on.#x201D;
Under the terms of the merger agreement, Pacific Rim Bank shareholders will become shareholders of FFI and each outstanding share of Pacific Rim Bank common stock will be converted into 0.3950 of a share of FFI common stock. In total, Pacific Rim Bank shareholders will own approximately 7.8% of the outstanding shares of FFI#x2019;s common stock immediately following the consummation of the merger. Based on FFI#x2019;s closing stock price of $18.18 on November 24, the merger consideration is valued at approximately $7.18 per share of Pacific Rim Bank common stock or $11.8 million in aggregate. The value of the merger consideration will change based on fluctuations in First Foundation#x2019;s stock price.
The transaction is expected to be completed by mid-year 2015 subject to approval by Pacific Rim Bank#x2019;s shareholders, the receipt of required regulatory approvals, and other customary closing conditions. The agreement was unanimously approved by the Board of Directors of each company.
First Foundation was advised in this transaction by Stradling Yocca Carlson amp; Rauth as legal counsel. Pacific Rim Bank was advised by Sandler O#x2019;Neill + Partners, LP, as financial advisor, and Manatt, Phelps amp; Phillips, LLP, as legal counsel.
About First Foundation
First Foundation, a financial institution founded in 1990, provides integrated investment management, wealth planning, consulting, trust, and banking services. As of September 30, 2014, First Foundation Advisors has $3.2 billion assets under management; First Foundation Bank has $1.3 billion total assets. The company is headquartered in Irvine, with offices in Newport Beach, Pasadena, West Los Angeles, San Diego, Palm Desert, and the Imperial Valley in California, and Las Vegas, Nevada. For more information about First Foundation, please visit our website at www.ff-inc.com.
About Pacific Rim Bank
Pacific Rim Bank, founded February 27, 2006, offers full-service banking to businesses and individuals in Hawaii. As a community bank, its emphasis is on serving the needs of the local community as well as small- to medium-sized businesses.
This press release includes forward-looking statements about First Foundation Inc., First Foundation Bank, and Pacific Rim Bank and the proposed transaction. All statements in this press release, other than statements of historical fact, are forward-looking statements. In particular, statements regarding our expectations or beliefs about our future financial performance or the realization of the expected benefits of the merger transaction contained in the this press release are subject to a number of risks and uncertainties and, as a result, FFI#x2019;s future financial results could differ materially from those expected at the current time due to such risk factors, some of which may be difficult to predict and are beyond our control and the control of Pacific Rim Bank. Those risks and uncertainties include, but are not limited to: the risk that we will not succeed in obtaining the regulatory or shareholder approvals needed for our acquisition of Pacific Rim Bank; the possibility that cost savings and other benefits expected to be realized from the acquisition may not be realized within expected time frames or at all; and the possibility that integrating Pacific Rim Bank#x2019;s banking business into First Foundation Bank#x2019;s banking business could cost more, take longer, or be less successful than expected. In addition, FFI#x2019;s business is subject to other risks and uncertainties that could adversely affect its financial results in the future. Those risks and uncertainties include, but are not limited to, the risk of incurring loan losses, which is an inherent risk of the banking business; the risk that the economic recovery in the United States will stall or will be adversely affected by domestic or international economic conditions and the risk that the Federal Reserve Board will continue to keep interest rates low, any of which could adversely affect our interest income and interest rate margins and, therefore, our future operating results; and 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. Additional information regarding these and other risks and uncertainties to which our business and future financial performance are subject is contained in Item 1A, entitled #x201C;Risk Factors#x201D; in our 2013 Annual Report on Form 10-K for the fiscal year ended December 31, 2013, that we filed with the SEC on March 25, 2014, and readers of this news release are urged to review that additional information contained in that Annual Report.
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 news release, which speak only as of todays date, or to make predictions based solely on historical financial performance. We also disclaim any obligation to update forward-looking statements contained in this news release or in the above-referenced 2013 Annual Report, whether as a result of new information, future events, or otherwise, except as may be required by law or NASDAQ rules.
Additional information and where to find it
This press release does not constitute a solicitation of a proxy from any shareholder of Pacific Rim Bank. In connection with the proposed transaction between FFI and Pacific Rim Bank, FFI and Pacific Rim Bank will be preparing a proxy statement that also will constitute a FFI offering circular. That proxy statement/offering circular will be sent to the shareholders of Pacific Rim Bank, who are urged to carefully read the proxy statement/offering circular and any other relevant documents when they become available because they will contain important information about FFI, Pacific Rim Bank, and the proposed transaction. It also will be possible to obtain copies of the proxy statement/offering circular and other documents relating to the proposed transaction (when they become available), free of charge, from First Foundation upon written request to First Foundation Inc., Von Karman Ave., Suite 700, Irvine, CA 92612; Attention: John Michel, or by calling John Michel at 949-202-4160; or from Pacific Rim Bank upon written request addressed to Pacific Rim Bank at 500 Ala Moana Blvd., Honolulu, HI 96813; Attention: Randall Kawano, or by calling Randall Kawano at 808-457-3902.
BMO today announced the launch of a new blog designed to engage and educate Canadians on a variety of topics related to how they manage their wealth.
The blog, titled The Wealth Exchange, features expertise on the latest news and topics around building, planning and transitioning one's money and assets throughout all life stages.
"Canadians today are managing more money than ever before," said Betsey Chung, Chief Marketing Officer, Canadian Personal & Commercial Banking and Global Wealth Management, BMO Financial Group. "According to Statistics Canada, we have seen the average net worth of households rise nearly 80 per cent since 1999 to $243,800. It's critical that people seek advice when dealing with their finances. Our blog will provide a new resource for everyone to learn what they need to do in order to achieve their financial goals."
Ms. Chung noted that The Wealth Exchange gives readers access to thought leadership from a variety of BMO's top experts, including Douglas Porter (Chief Economist, BMO Financial Group), Dr. Amy D'Aprix (BMO Financial Group's Life Transition Expert) and Chris Buttigieg (Wealth Planning Strategy, BMO Financial Group).
To view The Wealth Exchange, please visit: http://www.bmowealthexchange.com/.
For more information on wealth management news at BMO, please visit http://www.linkedin.com/company/bmo-wealth-management-services-canada?trk=top_nav_home.
Get the latest BMO press releases via Twitter by following @BMOmedia
About BMO Financial Group
Established in 1817 as Bank of Montreal, BMO Financial Group is a highly diversified financial services organization based in North America. The bank offers a broad range of retail banking, wealth management and investment banking products and services to more than 12 million customers. BMO Financial Group had more than $586 billion in total assets and approximately 47,000 employees at July 31, 2014.
IRVINE, Calif.--(BUSINESS WIRE)--First Foundation Inc. (NASDAQ: FFWM), a financial services company that provides investment management, wealth planning, consulting, trust and banking services primarily to high-net-worth individuals and businesses, today announced that Tyler Resh has been appointed as Director of Marketing and Strategy of the firm. Prior to joining First Foundation, Mr. Resh was a partner at Echelon Partners, an investment bank and consulting firm focused on the wealth and investment management industries.
In his role, Mr. Resh will oversee all marketing and communications activities at the firm, which takes on an even greater significance in light of First Foundation's public listing on the NASDAQ exchange. Mr. Resh's broad experience in marketing Mamp;A deals, conducting valuations and providing strategic consulting will be brought to bear as First Foundation seeks to fuel expansion efforts in impactful and meaningful ways.
Scott F. Kavanaugh, Chief Executive Officer of First Foundation, comments, "We are very pleased to welcome Tyler to the team. His appointment is an exciting step for us as a firm, as we feel that our growth trajectory and our story warrant more visibility. Tyler's background and experience are a perfect fit for us and he will be instrumental in helping us crystallize our message and promote the strength of our brand."
Mr. Resh adds, "My initial interactions with First Foundation came while working as an investment banker. It was remarkable to hear everything they were offering clients - whether it was related to its banking capabilities, its trust services, its investment management offering, its financial planning solutions, or the fact they invest significantly in charitable causes in the communities they serve. I have always held First Foundation in high regard, and it is something I am now fortunate to be a part of. This is a rare opportunity that offers a new journey worth pursuing.
Mr. Resh brings to First Foundation 17 years of experience as an investment banker and strategy consultant. He has over 14 years of experience advising wealth and investment managers on strategic options related to growth. In addition to conducting Mamp;A deals, Mr. Resh would be retained by clients to assist with marketing and strategic growth initiatives. His expertise in marketing was called upon frequently by clients looking to increase the effectiveness of their internal client and prospect outreach programs. Mr. Resh has also been the co-host of the Deals and Deal Makers Summit, a conference focused on buying, selling, and merging wealth management firms. His extensive network of contacts and his strong knowledge of the investment management, wealth management and banking community is certainly something First Foundation plans to leverage as the firm expands its visibility and reach.
Mr. Resh began his professional career as a management consultant at a prominent LA-based consulting firm. Mr. Resh holds a degree in Economics from UCLA.
This press release shall not constitute an offer to sell or the solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
About First Foundation
First Foundation, a financial institution founded in 1990, provides integrated investment management, wealth planning, consulting, trust, and banking services. As of September 30, 2014, First Foundation Advisors has $3.2 billion assets under management; First Foundation Bank has $1.3 billion total assets. The company is headquartered in Irvine with offices in Newport Beach, Pasadena, West Los Angeles, San Diego, Palm Desert and the Imperial Valley in California, and Las Vegas, Nevada. For more information, please visit our website at www.ff-inc.com.
To accompany Fox Rothschilds legal discussion of the new Israeli tax on US trusts with Israeli beneficiaries, Bernstein Global Wealth Management prepared the following hypothetical case study.1
Andrew and Jennifer Lewis, US citizens, both 55-years-old, are the parents of one adult daughter, Melissa, an Israeli resident of long standing. The Lewises have a net worth of $50 million, and they to transfer a considerable sum to Melissa, assuring her lifestyle. The Lewises realize that they almost surely wont be able to avoid estate taxation altogetherbut they want to lessen their tax burden.
With these goals in mind, the Lewises decide to set up a $10 million grantor trust for Melissas benefit, with distributions to begin in the near term.2 But they have questions to answer first:
- What allocation of assets should they choose?
- What impact would the trust have on the growth of wealth and on estate taxes?
- Should they elect to pay the 25 percent annual Israeli tax on the trust income (which in this case would be wholly allocated to Melissa) or the 30 percent deferred rate on trust distributions when received?
Counterintuitive Tax Choice?
Lets approach these issues from the bottom up. As to the tax-rate election, the Lewises first impulse was to take advantage of the deferral. But Bernsteins preliminary view on the question, based on the currently known facts about the new Israeli law, favored the 25 percent annual regime for a couple of reasons.
First, the tax rate on the annual schedule is simply lower, magnifying the salutary effect of the Israeli credit for US income taxes paid. Indeed, with a 100 percent stock allocation, the incremental impact of an annual Israeli tax would be only 1.2 percentage points (25 percent to23.8 percent on qualified dividends and long-term gains; see Asset Allocation Is Key).
With a 30 percent tax, the impact escalates to 6.2 percentage points: five times greater. And so our research indicates that the crossover point, at which the wealth advantage of deferral overwhelms the lower tax rate, is decades out in the future in typical marketseven for a moderate allocation of 60 percent global stocks and 40 percent bonds (see Defer or Pay Annual Tax?).
Second, absent explicit guidelines from the Israel Tax Authority (ITA), taking the deferred route will likely complicate and could potentially threaten the recognition of credit for US income taxes paid. (Our analysis assumes that the 30 percent rate will eventually have to be paid.3 We may revisit the question of tax regime if the ITA issues further guidance.)
A Beneficial Stock Tilt
As to what the Lewises can expect their trust to provide in the way of incremental wealth versus keeping all their assets on their balance sheet, asset allocation is a critical variable. With the new Israeli taxes factored in (see Grantor Trusts Still Advantageous), the benefit of the trust is relatively small for fixed-income-heavy portfoliosbut increases steadily with higher equity commitments. Indeed, Bernstein would ordinarily counsel settlors with Israeli beneficiaries to set up a stock-tilted portfolio. Still many settlors would understandably avoid all stocks because of their short-term volatility.
The other side of the coin is that the Israeli tax makes bond-heavy grantor trusts unappealingand particularly so if the bonds in question are municipals. Why pay a 25 percent tax on muni income in the trust when it would be subject to a zero percent rate in the US? So one possibility for the Lewises would be to set up a $6 million grantor trust, allocated 100 percent to equities, and keep $4 million in municipal bonds, earmarked for Melissa, on their balance sheet.
But the Lewises were uncomfortable with an all-stock trust, because Melissa would likely be relying on relatively steady annual distributionshard to come by from an all-stock portfolio. And so their decision was to allocate the trust to a moderate-growth 60/40 mix, understanding that this isnt likely to be as beneficial as an all-stock allocation in the long run but is better suited to meet their objectives and is likely to result in more wealth than not establishing a trust
Note on Bernstein Wealth Forecasting System
The Bernstein wealth-forecasting model simulates plausible paths of return for each asset class, producing a probability distribution of outcomes; however, it goes beyond randomization by projecting 10,000 forward-looking market scenarios, integrated with an individuals or a couples unique circumstances. The forecasts are based on the building blocks of asset returns, such as inflation, yield spreads, stock earnings, and price multiples. These incorporate the linkages that exist among the returns of the various asset classes, take into account prevailing market conditions at the beginning of the analysis, and factor in a reasonable degree of randomness and unpredictability. In evaluating scenarios, we often focus on the 10th, 50th, and 90th percentiles of confidence as a proxy for excellent, median, and very poor markets, respectively.
1. All Bernstein projections in the case study derive from a proprietary, systematic planning tool that overlays investor goals with a sophisticated Monte Carlo simulation. The simulation engine generates 10,000 possible market outcomes, ranging from spectacular to dismal. This case study shows only median outcomes.
2. Bernstein baseline assumptions: Top US marginal income-tax rates = 43.4 percent for ordinary income, 23.8 percent for qualified dividends and long-term capital gains. Funds to pay grantor-trust taxes would have otherwise been subject to a 40 percent federal estate tax upon the death of the grantor. No state income or estate taxes have been modeled.
3. If theres a meaningful chance that certain transactions will avoid taxation altogether under the deferred regime (because of an Israel Tax Authority determination or the early death of both Lewis parents), that would become the preferred route.